The application to build the controversial Basin Reserve flyover was denied permission because of an error in law, according to the lead counsel for the New Zealand Transport Agency.
Matthew Casey QC argued in his opening submission to the High Court on Monday that approval for the NZTA's proposal of the $90 million project was not given because the Board of Inquiry made "significant errors in law" when reaching its decision in 2014.
He said those errors had a trickle down effect, ultimately impacting the judgment.
The NZTA is making the case that incorrect weight was given to the factual findings of the original evidence, courtesy of a wrongful application of the law.
Mr Casey said the minority in the initial 3-1 judgment had taken the correct approach in interpreting the law.
David McMahon was the only commissioner to vote to approve the flyover last year, believing it would be key to unlocking other planned infrastructure projects in Wellington.
The other three commissioners agreed that the flyover would improve Wellington's traffic, but said it didn't fit with the area's landscape, aesthetics, open space, amenity and heritage.
The NZTA said it would draw heavily on Mr McMahon's findings in its appeal, and prove how his approach would affect the evidence and ultimately, the decision.
The hearing is set down for two weeks.